Dynaflex Corp

question 173

Multiple Choice

Dynaflex Corp. is considering an investment project that costs $950 today. It expects the project will yield income of $350 at the end of years 1, 2, and 3. The interest rate must be ________ for the firm to undertake the project.

• A) at least 8%
• B) no more than 5%
• C) exactly equal to 10.5%
• D) It is indeterminate from the given information.

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Definitions:

Price Discriminate

The practice of charging different prices to different consumers for the same product or service, based on what the seller thinks the market can bear, rather than standard costs.

Monopolist

An entity with exclusive control over the supply of a particular good or service, setting prices without competition.

Pure Monopolist

A market structure where a single firm completely dominates the market, with no close substitutes for its product, allowing it to control prices.

Discriminating

The act of making a distinction or differentiating between items, people, or situations, often based on specific criteria.